Toyota accused of fueling internal competition in China with its Corolla and Levin cars

Many in the industry worry about internal competition between FAW Toyota's 11th Generation Corolla and Guangqi Toyota's Levin. Mr. Jiang denied allegations that the two models are competitive, stating that internal competition is harmful to a brand's image. He stated that he believed the Corolla would help raise the Levin's image, allowing it to compete with rivals such as the VW Sagitar and Nissan Bluebird Sylphy. Comments from other Chinese officials from Toyota echoed Mr. Jiang's sentiments.

Despite this, ever since the two models launch at April's Beijing Auto Expo, the media has been afloat with rumors of internal competition. the 11th Generation Corolla, released by FAW Toyota, is based on the European Corolla, while the Levin, released by Guangqi Toyota, is based on the Corolla sold in the US. The two models were designed by the same designer, targeted at the same demographic, boast identical dimensions as well as remarkably similar specifications and price tags.

Commenting on the discrepancies, designer Shinichi Yasui stated that the next generation Corolla is aimed towards customers looking for advanced technological features, while the Levin boasts a much more sporty feel.

That said, it is hard to deny how similar the two models seem to the average consumer. Exactly what is Toyota's plan? Some believe the manufacturer is mimicking a similar strategy done by competitor VW, who used the differences in location, sales method, market positioning and other aspects between its two Chinese joint ventures to ensure that similar models could both achieve strong sales results.

According to reports, many parties in Toyota's Chinese operations are unhappy with the plan. One representative from FAW Toyota was quoted as saying that Toyota is in danger of causing internal competition between its two JV enterprises.

Increasing localization rates may prove to be an ace up Toyota's sleeves. According to reports, China is the only market where an 8-speed continuously variable transmission is available for the Corolla, models in all other countries only come equipped with 7-speed gearboxes. The 8-speed gearbox is currently only manufactured in Changshu, Jiangsu. Meanwhile, the Corolla's dual VVT-I engine is also manufactured domestically at Toyota's plant in Tianjin. Mr. Yasui states that the fact that its core components are domestically produced allows for this generation of Corollas' price tag to be over 10,000 RMB ($1,623) cheaper than previous generations.

Toyota ultimately aims for 90 percent of the Corolla to be domestically manufactured. At the same time, it is aiming to raise domestic production rates for its Crown, RAV4, Vios and other models. By comparison, due to technological and sales factors, the Prius, Prado, Land Cruiser and other models will continue to rely on primarily imported parts. Mr. Jiang believes that this is an impediment to the manufacturer's further growth in the country, as it has been unable to reduce the prices of these models.

Toyota's global automobile sales in 2013 totaled 9.98 million units, 250,000 units more than rival VW. However, Toyota's automobile sales in China for the year were just a mere 917,500 units, compared to a whopping 3.27 million units sold by VW in the country.

Following its entry in China in 2002, Toyota's market share gradually increased to a high of 9.5 percent in 2008. Since then, however, that figure has been dropping. Toyota hopes that its plan to release 15 new models in the country by 2017 will reverse this tide and put it back on the track to become a top three manufacturer in the country. The manufacturer hopes to increase its annual sales volume to two million vehicles by that time.